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Eurozone manufacturing PMI rises to three-month high in July
The PMI strength was driven more by backlog work than new demand, while firms continued cutting headcount.
Eurozone manufacturing extended its recovery in July, with S&P Global's final Manufacturing PMI rising to 51.9 from 51.4 in June, its highest level in three months, according to Action Forex. The survey also pointed to faster production, with the Output Index climbing to 52.9 from 51.7, its highest level in 52 months. However, ActionForex reports that output growth depended largely on manufacturers drawing down existing order backlogs rather than seeing a meaningful pickup in new business. New orders increased, but at a sluggish pace, prompting firms to rely more on earlier orders to keep production lines running. At the same time, manufacturers trimmed headcounts, reflecting concerns that demand may not be strong enough to sustain output once backlogs are exhausted. The recovery was uneven across the region, with Germany posting one of its strongest PMI readings in more than four years, while France and Spain were described as broadly stagnant. Action Forex also noted that easing supply bottlenecks and energy-related cost pressures were partly offset by ongoing Middle East tensions, which kept supply chains strained and energy prices elevated, leaving the durability of the manufacturing rebound dependent on whether demand strengthens.